KUALA LUMPUR (Nov 14): Property developer Seal Incorporated Bhd (KL:SEAL) is seeking its shareholders' approval at an extraordinary general meeting to be convened to provide corporate guarantee to a RM293 million banking facility that its 20%-owned associate MSR Green Energy Sdn Bhd (MSRGE) is obtaining from a licensed financial institution based in Malaysia.

MSRGE is also obtaining an uncommitted foreign exchange contract (FEC) facility amounting to RM10 million from the same licensed financial institution.

"The conditions imposed by the financial institution on the banking facility and uncommitted FEC include, among others, a corporate guarantee from Seal in proportion to its 20% shareholding in MSRGE, which amounts to RM60.6 million," Seal said in a filing with Bursa Malaysia on Thursday.

This means that in the event MSRGE is unable to meet its obligations to the financial institution in respect of the banking facilities, Seal will be required to assume its obligations under the corporate guarantee.

The banking facilities will be used to finance the engineering, procurement and commissioning of battery energy storage system (BESS) awarded by Sabah Electricity Sdn Bhd (SESB) to MSRGE, which is principally involved in solar photovoltaic installation system and renewal energy projects, project management, and consultancy and electrical works.

"The availability of expedient banking facilities would assist in avoiding unnecessary delays throughout the performance of works by MSRGE and ensure the timely completion of the Sabah BESS project," said Seal.

Apart from Seal, MSRGE is 40.8% owned by KVC Corp Sdn Bhd and two individuals — Ong Kah Hui (36.29%) and Qiang Xiaoyu (2.91%). Seal's largest shareholder Aaron Chen Khai Voon, who is co-founder and significant shareholder of Genetec Technology Bhd (KL:GENETEC), holds an indirect controlling 60.8% stake in MSRGE through Seal and KVC Corp. Chen holds a 30.66% stake in Seal.

In November 2023, SESB had conducted a tender for the Sabah BESS project, with MSRGE submitting its bid in December that year. SESB has since received a letter of notification from the Energy Commission for the construction of 100MW BESS with energy storage capacity of 400 megawatt-hours, located in Lahad Datu on the eastern coast of Sabah.

On Sept 12 this year, MSRGE received a letter of award from SESB for the Sabah BESS project with a contract sum of RM645 million. The Sabah BESS project commenced construction in September this year and is expected to be completed by June next year.

Astramina Advisory Sdn Bhd has been appointed as financial adviser for the proposed provision of financial assistance.

Seal shares closed down 1.5 sen or 2.14% at 68.5 sen on Thursday, giving it a market capitalisation of RM287.9 million. The stock has risen 67.1% so far this year.